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  • Lease buyout clause might cost me $6000 extra

    Hi everyone, when I got my solar lease in 2016 a big attraction was the ability to buy out the system for a reasonable amount in 2023.
    The system could be all mine for just over $9000, according to a table of buy out dates contained in my lease. It is a nice system that needs some expansion.

    It was a big selling point that I could do this. The thinking being that I might want to upgrade the number of panels, the microinverters etc. when newer technology was out. Without this provision I might not have signed up and I would have opted to go without a lease entirely. But they got me hooked.

    My orignal lease holder, NRG solar, sold its leases to Spruce Energy and as of now Spruce does not seem to be answering the question on buyouts the way I expected.

    Instead of saying it would cost $9000 as in the contract, they seen to think my buyout would be much more, like $15000.
    This is ridiculous considering I have old Jinko 260 watt panels. It seems to me that if their sales team said I could by the system out for $9000 when I signed up they should honor that.
    The contract does contain language on comparing $9000 to fair market value. But I am not sure they can enforce that language as it is not properly referenced in other places.

    Where can I go to make the argument that a 4.68Kw system does not have a $15000 market value anymore.

    Anyone else familiar with my situation?


  • #2
    Depending on the state you're in there could be consumer protections for solar to use as a starting point, otherwise look for a lawyer with reasonable rates to read your contract and go from there.

    Comment


    • #3
      Originally posted by leftlink View Post
      Where can I go to make the argument that a 4.68Kw system does not have a $15000 market value anymore.
      Place an ad on Craigslist for a 6-year old 4.68kW grid tie system and see how few offers you get?

      Sorry they are screwing with you but I'm sure they bought out those leases to make money off of them any way they can. If that means over-charging you for an early buyout or holding the leases to the very last second of the contract, they will do that because it is only paperwork to them.
      Dave W. Gilbert AZ
      6.63kW grid-tie owner

      Comment


      • #4
        Yup time to decide if it is worth getting a lawyer involved. Any reduction in buy out cost from what they are asking will get eaten up by a lawyer. They are betting on that.

        Comment


        • #5
          Ahh - more of the joys of leasing. Too bad you leased in the first place.
          Potential solar lessors take note and learn.
          Azdave's suggestion about estimating the value of a 6 year old system seems sound common sense.
          I'd read my contract again along with all the documents it references before I contacted legal counsel if for no other reason than to be able to discuss the matter intelligently as well as to try to glean if the PV owners do have you by the short and curlies.

          Comment


          • #6
            I expect its a business model, buy leases at a discount and then try to make additional dollars by holding up leaseholders for buyouts. They just need a lawyer on retainer and my guess is most people who signed the lease to begin with will not make a fuss.

            Comment


            • #7
              Sadly, when you get lawyers involved it'll likely end up costing you more than the original disputed amount.
              2 Kw PV Classic 200, Trace SW 4024 460ah,

              Comment


              • #8
                Well here is an update.

                The leasing company, after a couple of emails back and forth in which I requested more information on this buyout process and price, wrote me back. They said:
                Hi R.....,

                You are currently in year 6 of your agreement. Once you have reached Year 7 we will be sure to recalculate the Buyout price according to your contract. Please let us know if you have any additional questions or concerns. Thank you and have a great day.

                Regards,
                Ar...


                Now on the face of it this seems pretty annoying that they would make me wait until the buyout date to provide any information on the price. Also they didn't provide the date so yet another email had to be sent out to discover that my anniversary date is March 10, 2023.

                But it gets worse. My contract has language saying that I must notify Spruce Power at least 30 days prior of the anniversary date of my intent to purchase. Therefore if I were to follow their suggested process and wait until the anniversary date before requesting the buyout, I would lose my right to buy out the system under the contract terms which are much more favorable to me.

                This response is quite deceptive as it could keep many lessees from getting out of their lease. So I dug up the contract language and called them on this deceptive behavior (which, by the way, is likely a violation of state law). This is what I wrote:
                Hello:

                The instructions that I have been provided so far conflict with the terms of my contract. According to the contract section 9.2:

                9.2 To purchase the Solar System, you must
                notify us at least thirty (30) days prior to the
                applicable Purchase Option Date and you must
                pay the amounts due within thirty (30) days of
                receiving the invoice we send you. “Purchase
                Option Date” means either the 7th anniversary
                of the Production Date, or the expiration of the
                Term.

                Thus, if I were to wait until March 10 to indicate my intent to buy the system, then I would not be in compliance with the 30 day notification requirement.

                As the lease holder (jointly with my wife _____), I hereby notify Spruce of my intent to purchase my 4.68kW solar system on March 10, 2023 or the applicable Purchase Option Date associated with the seven year anniversary of my system.

                If there is a form that I need to fill out and have my wife also sign, please forward that form.

                Under the lease I signed with NRG originally, now owned by Spruce Power, it appears that you are obligated to send me an invoice for the amount that would be due if I purchase the system on this Purchase Option Date.

                Thank you.

                R.......


                So we are making progress here. If they don't comply with the contract and send me an invoice with the actual March 10, 2010 buyout price, then they may be sued for:

                -breach of contract by not honoring the price
                -deceptive practice of promising a buyout price when they sold me the system which it appears they don't want to honor
                -deceptive business practice of providing a lessee with incorrect information that could cause the lessee to forfeit their rights under the original contract.

                I will let you know how it goes. Over 24 hours have gone by and no reply yet from Spruce Power.

                Comment


                • #9
                  Originally posted by leftlink View Post
                  Well here is an update.

                  The leasing company, after a couple of emails back and forth in which I requested more information on this buyout process and price, wrote me back. They said:
                  Hi R.....,

                  You are currently in year 6 of your agreement. Once you have reached Year 7 we will be sure to recalculate the Buyout price according to your contract. Please let us know if you have any additional questions or concerns. Thank you and have a great day.

                  Regards,
                  Ar...



                  Now on the face of it this seems pretty annoying that they would make me wait until the buyout date to provide any information on the price. Also they didn't provide the date so yet another email had to be sent out to discover that my anniversary date is March 10, 2023.

                  But it gets worse. My contract has language saying that I must notify Spruce Power at least 30 days prior of the anniversary date of my intent to purchase. Therefore if I were to follow their suggested process and wait until the anniversary date before requesting the buyout, I would lose my right to buy out the system under the contract terms which are much more favorable to me.

                  This response is quite deceptive as it could keep many lessees from getting out of their lease. So I dug up the contract language and called them on this deceptive behavior (which, by the way, is likely a violation of state law). This is what I wrote:
                  Hello:

                  The instructions that I have been provided so far conflict with the terms of my contract. According to the contract section 9.2:

                  9.2 To purchase the Solar System, you must
                  notify us at least thirty (30) days prior to the
                  applicable Purchase Option Date and you must
                  pay the amounts due within thirty (30) days of
                  receiving the invoice we send you. “Purchase
                  Option Date” means either the 7th anniversary
                  of the Production Date, or the expiration of the
                  Term.

                  Thus, if I were to wait until March 10 to indicate my intent to buy the system, then I would not be in compliance with the 30 day notification requirement.

                  As the lease holder (jointly with my wife _____), I hereby notify Spruce of my intent to purchase my 4.68kW solar system on March 10, 2023 or the applicable Purchase Option Date associated with the seven year anniversary of my system.

                  If there is a form that I need to fill out and have my wife also sign, please forward that form.

                  Under the lease I signed with NRG originally, now owned by Spruce Power, it appears that you are obligated to send me an invoice for the amount that would be due if I purchase the system on this Purchase Option Date.

                  Thank you.

                  R.......


                  So we are making progress here. If they don't comply with the contract and send me an invoice with the actual March 10, 2010 buyout price, then they may be sued for:

                  -breach of contract by not honoring the price
                  -deceptive practice of promising a buyout price when they sold me the system which it appears they don't want to honor
                  -deceptive business practice of providing a lessee with incorrect information that could cause the lessee to forfeit their rights under the original contract.

                  I will let you know how it goes. Over 24 hours have gone by and no reply yet from Spruce Power.



                  Great job taking control of this situation. Hope it works out in your favor. You can always use the threat of bringing in "my lawyer" if needed.
                  Last edited by littleharbor2; 11-19-2022, 08:09 AM.
                  2 Kw PV Classic 200, Trace SW 4024 460ah,

                  Comment


                  • #10
                    What is the term of lease and monthly payment?

                    The lease company already have the incentive tax credit and no obligation to your system after buyout, I don't think there is any reason why they will not let you purchase the system.

                    What I am saying is if you are going to openly discuss here more information the better result instead guessing.

                    Comment


                    • #11
                      Originally posted by silversaver View Post
                      What is the term of lease and monthly payment?

                      The lease company already have the incentive tax credit and no obligation to your system after buyout, I don't think there is any reason why they will not let you purchase the system.
                      Sure, the lease is 20 years for $63.50 a month. It is not a big system and hence it is not that expensive.

                      Comment


                      • #12
                        Do you know what your production numbers look like? I imagine there is probably excess solar that the leasing company is selling that you don't even see. So they get the monthly payment from you plus something for selling the excess energy.

                        Maybe if you described the system (approx lat/lon, size, # panels, azimuths, inverter) and then your daily usage someone can figure out how much excess solar you're producing and how much it might be worth.

                        At this point if you have room for expansion you may just consider getting a 2nd system. Maybe think about just buying/financing this one.

                        Comment


                        • #13
                          Originally posted by leftlink View Post

                          Sure, the lease is 20 years for $63.50 a month. It is not a big system and hence it is not that expensive.
                          This is the part I am trying to understand. Let me put into a simple math with $$$

                          $63.50 X 12 months X 20 years = $15,240 This is what you pay for 20 years lease

                          $63.50 X 12 months X 7 years = $5,334 This is after 7 years lease you paid. Now you can purchase the system for $9000. If you add both together is $14,334

                          ***Your saving is $15,240 - $14,334 = $906 **** If you pay ALL the money after 7th year


                          I understand lease there s no interest, but rent charge in lease contract. So you are looking into a "saving" by paying all the money out front now to save yourself $906 so you don't have to continue paying $63.50 for another 13 years. You also willing to give up your solar guarantee from solar company and waive their responsibility to your solar system after lease buy out.

                          Do your thinking once again and ask yourself if you want to make another mistake.

                          Comment

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